Impact of Foreign Capital Inflows on Economic Development of Pakistan: A Disaggregated Approach

Abstract

The central intent of this study is to locate the fallouts of Foreign Capital Inflows (FCI) on economic development. Influenced from Human Development Index (HDI), constructs of economic development are disaggregated in multiple models and the time series estimation is done while relied upon forty-two years data ranging from 1980 to 2021. For cointegration analyses, Bound Test and Autoregressive Distributed Lag (ARDL) are used. Findings proved positive effects of components of FCI on the indicators of HDI except foreign debt. As a suggestion, it is recommended to focus upon appropriate debt management policy to eradicate the harmful consequences of foreign debt and to improve institutions and infrastructure to maintain certain inflow of foreign financing.